Tim Hughes puts the boot into the highs and lows of the online travel business (with an Australasian/Asian bias) with some blogging about consuming and loving travel thrown in.

Monday, August 31, 2009

Zuji boss Roshan Mendis on Travelocity buying Travelguru

Ease of adjustment in logo colours is never a factor in an acquisition but it has not taken long or much design work to add a few Travelocity stars to the logo of the newly acquired Indian online hotel player Travelguru. Thankfully they avoided the branding redundancy of adding the Zuji tag line of "your online travel guru".

Roshan is very bullish about the acquisition, as he should be for something he has likely just paid tens of millions if not a hundred or so for. He feels the Indian market is at the right time for acquisition and expansion. But he is also upfront that the deal is not without risk. He admits that integration will be a challenge especially on the people front.

Here is some more detail from our interview

BOOT: This acquisition was your first big move as the new regional lead for Travelocity. Why India and why this company?

Roshan : Couple of reasons. We see India as a top three market in region. Looking ahead to 2012 – research indicates will be right next to China, Japan and Australia as top online travel market. In addition the OTA, general market and accommodation market growth rates in India are attractive. But it is still an emerging market. So this is not a deal without risk.

Roshan: Absolutely – big three make up 80% of market. Competition is stiff and irrational at times. Certainly attractive bits in online space but domestic flights are unattractive and that is where competition is most fierce. Looking to compete differently through Travelguru.

BOOT: Will you bring the supply facing teams together?

Roshan: Putting integration plans together now. The Intent is for a unified partner marketing [Travelocity name for supply team] to represent Travelocity India for all brands.

BOOT: I read there were a lot of challenges in integrating Travelocity and Lastminute supply operations in Europe, are you concerned about the integration task here?

Roshan: I won't comment on the Travelocity and Lastminute integration but generally acquiring and integrating a company particularly on the people side is not a small job. [We are going into the integration effort] with a common purpose and goal between Travelocity.co.in and Travelguru. [Including] clear expectations in leadership between the two. Under no allusions that going to be a cake walk putting people, processes and culture together.

BOOT: In the press release Travelguru founder and CEO Ashwin Damera, said "he was excited with the deal and would want to replicate the story in other Asian". Tell me more about this idea?

Roshan: Purpose of the deal and intent is to focus on India and make success in India – over and above that – the model might work in other market but don’t think that is where short term effort will be.

Roshan: [regarding the marketing plans of Travelocity and Travelguru in India] past behaviour is the best indication of future behaviour. If you look at Travelocity.co.in, it is has grown in last few years. [On marketing we are] very analytical and invest in those channels that allow for growth and maximise profit. [BOOT I took this to mean a focus on online channels rather than offline spend]

Roshan: In our portfolio in AP have a number of assets and they have certain kinds of potential determined by size of market, size of online pie, balance between supply.com and intermediates etc. Different expectations for the different markets and invest in those markets according to our expectations on what it should and can deliver. [delicately keeping with the analogy] We have a set of cylinders that are not the same size and horse power. Need to recognise and pump with the appropriate level of fuel to achieve the maximum potential. We take a portfolio view – have a place and role for each asset in the portfolio and will support to meet full potential.

BOOT: Finally - what worries you? What things do you want to make sure you get right?

Roshan: The acquisition. Lots of things to determine success of acquisition. There are social and economic events to keep track of as well as the maturity of the space, consumers, online penetration etc.

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